Ohio fares poorly in Tax Foundation ranking of state tax climates

Gov. John Kasich promised to get Ohio operating “at the speed of business,” but as the Tax Foundation sees it, the state is still a laggard.The nonpartisan organization based in Washington, D.C., which provides research and analysis on federal and state tax policy, has issued its 2014 State Business Tax Climate Index, and Ohio ranks 39th of the 50 states. The state's rank was unchanged from the 2013 index.The Tax Foundation says it collects “over a hundred tax provisions for each state and synthesizes them into a single, easy-to-use score” based on five components: corporate tax rate, individual income tax rate, sales tax rate, unemployment insurance tax rate and property tax rates.Ohio was in the top 10 in only one category — unemployment insurance tax rate. Its worst ranking was in individual income tax rates, where the state placed No. 44, according to the Tax Foundation.The top 10 states, in order, are Wyoming, South Dakota, Nevada, Alaska, Florida, Washington, Montana, New Hampshire, Utah and Indiana.According to the Tax Foundation, the “absence of a major tax is a dominant factor” in vaulting most of those states to the top of the rankings. For instance, Wyoming, Nevada and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.The 10 lowest ranked states are Maryland (No. 41), Connecticut (No. 42), Wisconsin (No. 43), North Carolina (No. 44), Vermont (No. 45), Rhode Island (No. 46), Minnesota (No. 47), California (No. 48), New Jersey (No. 49) and New York (No. 50).Tax Foundation economist Scott Drenkard said in a statement that the index rewards states that “are moving closer to a tax code that collects revenue without unnecessarily distorting business decisions. Their tax codes became more neutral.”He said the goal of the ranking is “to start a conversation with policymakers about how their states fare against the rest of the country. With this report, we're asking: 'How well is your tax code structured? Are businesses in your state spending too much time complying with onerous tax provisions? Are you double taxing things you shouldn't?'”

Morning Roundup

Business headlines from Crain's Cleveland Business and other Ohio newspapers — delivered FREE to your inbox every morning. Sign up for the Morning Newsletter.